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LEGISLATIVE COUNCIL OF THE VIRGIN ISLANDS
BUDGET ADDRESS 2006 “Advancing
Our Social Services” by the
Honourable Ronnie W. Skelton
Minister of Finance and Economics Development
Minister of Health and Welfare
Delivered on: 16th December ,2005
1. Madam Speaker I move that the Bill shortly entitled, the Appropriation Act
2006, be read a second time and, in so doing, I invite this Honourable House to extend its customary indulgence in permitting me to read the Budget Address.
Introduction
- Madam Speaker let me begin by giving thanks to Jehovah God for His kind mercies to the people of the British Virgin Islands by sparing us from disasters during 2005, and for affording us the opportunity to prosper. Secondly I would like to acknowledge our Chief Minister, Dr. the Honourable D. Orlando Smith, for his leadership and vision, which are the foundation of our work and the guiding spirit of this Budget.
- Madam Speaker our successes in 2005 came through the participation of many. I especially thank Honourable members of this House for their support and contributions in the framing and passing of crucial laws, fundamental to the growth of our Territory. And, above all else, I thank the men and women of this Territory whose hard work and spirit are the soul of this community. We gather today to reflect on the year 2005 and to look ahead to the year before us. This Budget that we present today before this Honourable House and before the people of the British Virgin Islands is a clear reflection of where we are and where we need to go as a Territory and a people.
- The Budget is a document made up of numbers and figures – it is written in the language that everyone understands dollars and cents. And yet, if we look closer at this Budget there is a much broader story – the story of a people who through hard work, and sacrifice, and talent and dedication to building a better future for our children, have created here in our small Territory a wonderful tale of success.
- This Madam Speaker is the story of the men and women who built here a world-class tourism industry. They learned the art of hospitality and infused it with the unique spirit and warmth of the British Virgin Islands. And in so doing, they created a tourism product that attracts tens of thousands of high-end visitors from every corner of the globe. It is also the story of visionaries who recognized the opportunity to make our Territory into a world-class finance centre; a centre for business activity that brings capital from the world financial centres in Europe, North and South America and Asia. Thanks to these pioneers and leaders, our Territory is standing today on a firm economic foundation. More importantly, as we now peer into the future we see that this Territory stands on the crest of a wave that is rising and carrying us to new heights. This Budget carries within it the heroic story of all those who came before us and built a modern, progressive society founded on the principle of equal opportunity, social justice and the freedom for every individual to use the time that Jehovah God has allotted them on this Earth to make the most of those gifts that He in His infinite wisdom bestowed upon them.
- It is, therefore, with great humility and with a sense of deep responsibility that I stand proudly today to present this Government’s Budget for 2006, which we have created with a clear goal in mind: To build on the success of the past and to provide new energy for further economic expansion in the years ahead. And let me be clear at the outset Madam Speaker – the growth we seek is not wealth for the sake of wealth. We do not aspire to build soulless castles; we do not dream here of gold-paved roads or empty materialism. We seek to expand our economy because we recognize that only a growing economy can provide our people the quality of life and the opportunity that they have earned and so richly deserve.
- Only a strong and growing economy can produce the tax revenue to allow us to invest in world class schools and hospitals; only a strong and growing economy can allow us to support our elderly in their golden years; And only a strong and growing economy can create business and economic opportunities and good jobs so that every BVIslander who seeks to work and to find personal fulfillment through a rewarding career has the chance to do so. That is the growth we seek – a growth that is not about money, but about people. It is about empowering the people of the BVI to accomplish all they dream of and to live as they deserve to. It is with this grand objective in mind that this Government has already begun to formulate the beginning of major projects that will contribute significantly to the future success of this country. In the short term we expect to see significant contributions to the economy from the economic and business opportunities and jobs created from these developments, and in the long term sustainable successes from the post development phases. Madam Speaker the economic forecasts point to continued growth in the order of 5-6% over the next four years.
- We are living in a constantly changing world. Once, the economic globe was divided into two clear camps: the “haves” in North America, Europe and Japan, and the “have-nots” in the rest of the world. Today that unjust state of affairs is on the retreat in a significant part or the world, China and India, the two most populous nations in the world are awakening from a decade long slumber and emerging as the economic superpowers of the next millennium, carrying the rest of Asia with them. The United States remains an economic giant, however the cost of war abroad and the flight of jobs to lower cost labour centres in Asia, Mexico and Latin America have created a sense of instability – a feeling that is enhanced by the enormous and constantly growing trade and Budget deficits. Europe also, faces an uncertain future as rapidly aging populations and low to negative birth rate seek to undermine the future of the social infrastructure on which these societies are built. Additionally, these societies are facing challenges coping with the tide of immigrants that are not yet fully integrated into their societies. At the same time, Latin America continues to struggle with the challenges posed by the transition to liberalized economies. And, of course, the great and ongoing health and social tragedies of much of Africa remains as the single greatest moral challenge of our age.
- As these enormous changes wrack the globe, they leave in their wake a new world to which we must all adjust. Never before in human history have we been so connected – indeed, the choices made half a world away can and do have an impact on our lives here in the BVI. The increased demand for fuel in developing nations, coupled with the disastrous Hurricanes in the southern United States led to hikes in gas prices at our pumps and electricity bills here at home. Increased global warming caused by the emissions spewing out of hundreds of millions of tail pipes and smoke stacks threatens to create ever more dangerous storm seasons here in the Caribbean. And social displacement caused by rapid cultural change, has created a new threat in the form of the suicide bomber and fanatical terrorist. Taken together these changes present enormous challenges for us here in the BVI and for humanity as a whole.
- However, as great as the challenges surely are, so too are the opportunities. Because our world is more connected than ever before, we have the chance to learn from people in every part of the planet. Global trade has created vast new wealth that, when used wisely, can provide a longer, more healthful and more satisfying life for our people. And as human invention becomes ever more powerful, new tools are put into our hands for the purposes of education, healthcare, art and culture that could not have been dreamt of by generations past.
- Madam Speaker today as we review this Budget, we must be mindful, that it is the duty of all who are in leadership positions in this Territory, whether public or private sector, to keep a mindful eye on the changes taking place throughout the world and to ensure that we here in the BVI are prepared to minimize all adverse effects and to seize the opportunities that are presented to us. On the home front we are not immune to the same wave of rapid change that is everywhere the order of the day. Our tourism and financial services industries continue to grow and thrive. And yet, we recognize that we also face unprecedented competition. These challenges from abroad are matched too, by the challenges we must face at home. For the first time in our Territory’s history, we have witnessed terrible acts of serious crime. We continue to wrestle with the enduring challenge of justly and fairly dealing with the issue of immigration and foreign labour.
- We remain ever mindful of our continuing obligation to ensure that the fruits of our growth are not concentrated in the hands of the few, but rather are utilized to improve the lives of all our people. To these challenges we are responding with resolve and firm purpose. We do not accept that crime is an inevitable by-product of economic growth. We do not believe that it is impossible to balance respectful treatment for those from abroad with fair protection for our native born sons and daughters; and we do not for one moment think that we cannot have economic growth and ever-greater social justice. Through self-reliance and discipline we can and we will meet the challenges of this moment – and in doing so help to create the framework for an even brighter tomorrow.
Economic and Fiscal Outlook
- Madam Speaker the state of our economy has never been stronger. The gross domestic product is expected to increase from an estimated eight hundred ninety eight million, one hundred and thirty eight thousand dollars ($898,138,000) in 2005 to a projection of just under $1B in the next four years. This Government also realizes that in order to keep this country moving in the right direction, we must make prudent strategic choices. More than anything else, the success of the Territory in the 21st century is dependent on two central factors: the first key factor is the education and training of our people and the second is the quality of the Territory’s social and physical infrastructure, especially our transportation system, and telecommunication networks.
- Today, a successful nation does not necessarily need great natural resources; or armies of labourers; or vast open lands for agriculture. The modern information economy is about having talented and skilled people and the networks to get their ideas, products and services out to a world market. So this Budget is focused on making the necessary investments in education and training and towards building quality infrastructure. And as I said at the outset, we also recognize that a great society is not just about a strong economy – it is also about quality of life and about social justice. Therefore, this Budget anticipates spending more resources to improve our healthcare system, our education system, our legal system and our social services network.
- Madam Speaker, the Budget will be distributed among Ministries, Departments and Statutory Boards as follows:
1. Ministry of Communications and Works
$38,287,400
2. Chief Minister’s Office
$37,966,100
3. Ministry of Education and Culture
$36,689,400
4. Governors Group
$31,838,300
5. Ministry of Health and Social Services
$30,817,900
6. Ministry of Finance
$18,752,800
7. Ministry of Natural Resources and Labour
$14,133,500
8. Pensions and Gratuities, Public Debt,
Miscellaneous and Funds, combined
$24,669,600
- Taken together, our emphasis on making the needed investments to ensure economic growth, coupled with our resolve to provide the highest quality of life possible, we aspire that this Budget shall be a great tool toward creating here what my colleague from the seventh District often refers to in this Honorable House as a Great Little Nation.
- Madam Speaker, nothing more clearly or more powerfully will demonstrate this resolve than the physical work that will begin early in 2006 throughout our Territory: the new hospital, the new high school building, the road construction project on every island in our Territory, the new retirement centre, the continued series of road shows throughout the world – most recently in Asia – to promote our financial service industry, the new marketing campaign for our tourism industry, the improvements to the airports and seaports, the establishment of the Department of Culture.
- This is but a small list of activities that will be undertaken, all with the same goal of creating a stronger economy and more vibrant society. And this activity is not limited to Government projects. In October of this year we broke ground on Scrub Island commencing the major phase in the construction of a high-end resort and marina worth in excess of seventy million dollars ($70,000,000). This influx of capital, new money, will in its entirety be from outside investment into our economy, and as a result we expect major economic benefits and opportunities for our people. The bottom line, Madam Speaker, is that we are moving in the right direction.
- Madam Speaker in order to build these institutions and infrastructures, capital is required. The people of this Territory pay for its development and management through their taxes. However, the major industries of tourism and financial services pay through the various fees and charges levied on these industries contribute the majority of the revenue needed for the development of the economy.
- Madam Speaker, in order to finance these projects that are envisioned by this Government, we have two choices: either to raise taxes, or to encourage and foster economic growth. This Government has chosen the later, that is to encourage and foster economic growth. Taken together, Madam Speaker, we have every confidence that this plan will lead to steady and moderate growth as we have seen during the first two years of our administration. In looking at these figures, let us be thankful for the hard work of the people of this Territory who made this growth possible.
And let us all give thanks, for happy is the state that can spend on the future without sacrificing the needs of the moment.
- As we grow our economy, we will have the means to invest in major projects as a Government including funding the public service pension obligations, and our people will have the means to participate in the proposed National Health Insurance and National Pension Schemes. And we will do this in a manner that ensures that future Governments and generations to follow will not be burdened with liabilities that may make the management of our economy difficult. This is a testimony to this Government’s commitment to long term planning, and improving the standard of living for our people now and for generations to come.
- Growth in the Tourism Sector Madam Speaker is expected to be enhanced directly through the completion of the Scrub Island Resort and Marina, the Beef Island Resort and Championship Golf Course, the Norman Island Resort, and the development and completion of the Prospect Reef Hotel. We are all well aware that serious concerns have been raised about these projects and to these we have listened, and where necessary made adjustments. However we would be doing a disservice to our entire Territory if we allowed criticism to lead to paralysis.
- Madam Speaker, we will not allow this Territory to become paralyzed and uncompetitive. We encourage all people with concerns to make their voices heard. This Government has never shrunk from tough questioning. But we are equally committed to moving forward. Leadership means carefully weighing the costs and benefits of every choice – and then taking action in the interest of our people, that is what we are doing Madam Speaker. We will work with every ounce of energy to ensure that the wealth created by these projects benefits all our people. And as we do so, we will be vigilant in the defense of our precious environment.
- But we do not believe that this Territory will be well served by turning our backs on development. For if we do not work hard to attract new investment, both local and foreign and offer new products; then our visitors will go elsewhere – leading to fewer jobs, less tax revenue and a lower standard of living for our people. That is not an acceptable outcome in our minds,
nor is it an option. And so we are working with energy and determination to make our tourism sector the best it can be, including a major marketing initiative around the world to make sure that Nature’s Little Secrets continue to draw visitors for decades to come.
- Madam Speaker we continue to remain at the cutting edge of the financial services industry, knowing that it is the most significant single contributor to the Treasury. To this end we remain at the forefront of formulating the required legislation and ensuring the proper training of regulators to keep this sector successful and at the forefront of the industry. We will continue to experience growth in this sector as we continue to foster an environment that encourages new investment, and aggressively market our services to financial services centres around the world. The BVI Finance Centre and the BVI Tourist Board are working tirelessly on this initiative.
- Madam Speaker raising the levels of consumer spending within the Territory will come through policies aimed at improving the quality of retail goods and services to the people and visitors of these Islands, and by promoting a shift from overseas spending to the purchase of goods and services locally. This Government is initiating a facility through which local small businesses can access commercial loans with a partial Government guarantee. This will make it possible for more small business ventures to access loan financing for their businesses. We therefore look forward, with great hope and anticipation, to the day when we see young BVIslanders starting thriving new businesses.
- From this House let me say to every citizen listening that if you dream of starting your own business, if you have an idea that burns in your heart and that wishes to be expressed in the world, if you are willing to work hard and dedicate yourself to the goal of entrepreneurship, then your Government will stand with you and provide the support you need to succeed.
- Madam Speaker, the estimates that I have presented to this Honourable House on behalf of my colleagues and myself are meant to reflect through its different programmes, allocations and provisions, the intentions stated above. At this point, I will now turn my attention to the Budget draft estimates itself and the provisions contained therein.
Inside the Budget
- Madam Speaker before I get into the details of the estimates, let me say a word about the new Payroll Tax. This past year we introduced a significant tax reform policy in order to accomplish two goals: first, to make sure that our Financial Services industry was up to date with current international laws; and second, to make sure that our tax system is fair and progressive. The new Payroll Tax was the centerpiece of this reform. Under this new tax all employees have seen their total tax bill reduced significantly. And while there were many predictions of hardship on local businesses the fact is that businesses have grown and have adjusted to the new system. However, as is the case in any major transitions, there have been challenges. Most significantly, we have had a hard time in precisely projecting the amount of revenue the new system would generate. As a result, implementation challenges led to a shortfall in projected revenue. However, this shortfall in projected revenue was more than offset by a greater than expected growth in the Financial Services sector. We have accepted the lessons learnt, and our projections for Fiscal year 2006 are tempered by our performance in 2005.
- Madam Speaker upon opening this document one’s curiosity is satisfied after observing first the figure for revenue, and subsequently the appropriations to fund the various activities of the year. I am pleased to report, that notwithstanding the elimination of corporate taxes; a reduction in employee withholdings; the reduction of tariff on steel; grants of Hotel Aid for small properties and grants of pioneer status to businesses, our 2006 projected revenue collection is two hundred thirty-three million, one hundred fifty-five thousand dollars ($233,155,000). This represents an increase of 7.4% above 2005 projected revenue. This optimistic projection in revenue is due largely to the excellent performance of the Financial Services sector. Because this revenue was derived from sources all over the world, it signifies that our global marketing strategy is paying dividends.
- Madam Speaker it is projected that the Recurrent Expenditure Budget for Fiscal 2006 will be two hundred three million, seven hundred and ninety thousand dollars ($203,790,000). This is the figure upon which the Government relies for its day-to-day operations. With the recurrent obligations deducted from revenue, our surplus stands at a twenty nine million, three hundred and sixty-four thousand dollars ($29,364,000). From this surplus, twenty-four million, two hundred thirty five thousand, dollars ($24,235,000) will be contributed to the Development Fund for the execution of capital projects. The remaining approximately four million, dollars will be distributed among the Pension Fund, Emergency/Disaster Fund, Contingencies Fund, Repair and Renewal Fund, and the Reserve Fund.
- Madam Speaker, this Government in realizing the dynamic nature of its services to the public, and the importance of those services to the success of the Territory’s economy; has not hesitated to extend and enhance such services for 2006. The figures in this years’ Recurrent Expenditure Budget; will reflect the cost to establish: (a) a Department of Culture, and (b) a department to be known as the BVI Shipping Registry.
- Madam Speaker, with the establishment of a Department of Culture greater attention would be given to the preservation and development of our Culture. Honourable Members would agree with me, that this is an important aspect of our history and who we are as a people and every effort must be made to preserve it.
- Ships registration is big business, especially Category 1 Shipping Registration, but Madam Speaker, it also has its associated risks if not properly regulated. We are not benefiting from this category of shipping as we do not have a Shipping Registry that would provide the mechanisms to administer and regulate it. Therefore, Madam Speaker, we have taken the necessary action to establish the BVI Shipping Registry by combining the BVI Maritime Administration and the Ship Registration Section of the Financial Services Commission. It is hoped that this Department, which will fall under the portfolio of the Chief Minister, will be operational before mid 2006. Madam Speaker, we are building the foundations of a major source of future revenue for this Territory through ship registration.
- Madam Speaker to make the collection of Land and House Tax more efficient and effective, we will introduce ‘Property Tax’ as a replacement for Land and House Tax. Madam Speaker this change will not affect the current rate of either tax. Madam Speaker this change is as a direct result of representation made to me over the years about the inconvenience of having to visit the Department of Inland Revenue twice per year to pay these taxes.
Public Debt
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Madam Speaker, the financial position of the Government is strong. Public Debt now stands at one hundred two million, three hundred twenty seven thousand, eight hundred and ninety four dollars ($102,327,894) or 12% of GDP. Madam Speaker, of this Debt, Contingent Liability which is Government guaranteed debts of Statutory Authorities, Government Corporations and Companies accounts for forty six million, one hundred seventy seven thousand, one hundred and twenty one dollars ($46,177,121).
- Consistent with our commitment to sound and responsible management of the fiscal position of this Territory, Madam Speaker, we have signed an agreement called the “Borrowing Guidelines” with Her Majesty’s Government to maintain particular levels of the debt and reserve ratios. I am pleased to state that we remain on track to stay well within these limits, in the medium term.
- As of the end of November, the Territory’s net debt (which includes varying weights for the contingent liability), as a ratio of annual revenues, was 12.97%, below the 80% maximum prescribed by the “Borrowing Guidelines”. Likewise Madam Speaker, Debt Service, which was only 3% of Recurrent Revenues, fell well below the Guideline’s 10%; and the same held true for Liquid Assets which, as a ratio of Recurrent Expenditure, was in excess of 50%, a good 20% over the Guidelines.
Capital Budget Estimates of Receipts and Expenditures
- Madam Speaker, the Development Fund provides for infrastructural and institutional development in the Territory. It is a sacred trust – money generated by the hard work of our people that is allocated to implement the capital projects that are necessary to ensure the long-terms strength of our economy. Each Ministry is responsible for the development of projects under its head and subheads and funds are allocated for the year to implement these projects whether completely or in phases. This year the Ministry of Health and Social Development leads the way, by having eight million, one hundred ten thousand, three hundred and fifty nine dollars ($8,110,359) allocated to its Budget.
- This, Madam Speaker, exemplifies our Government’s commitment to the continued improvement of health care. In keeping with this commitment, this Government will vigorously pursue its plans to build a new hospital and improve health facilities on all sister islands in order that our people can benefit from affordable and accessible health care.
- Our Territory’s demands for development are both growing and challenging. Madam Speaker, the list grows to include such projects as:
- A new Hospital
- A new High School
- A senior citizen home
- A Territorial Sewage Treatment System
- A juvenile detention centre
- A mental health facility
- A solid waste disposal system and programme
- A public library
- A Judicial Complex
- A new Legislative Council Chamber
- And many other infrastructural improvement
- This Government is committed to ensure that all these projects and more become reality and the Budget estimates before you make quite clear, our intent for 2006.
2006 Work Programmes
Health and Social Development
- Let us look first then at Health and Social Development Madam Speaker under the leadership of the hardworking, dedicated and talented public servants in the Ministry of Health and Social Development we are continuing to expand our ability to meet the needs of our people. Our goal is clear: to ensure that each individual has equal opportunity to participate in activities that improve their health and well-being. With this in mind we are focused on both the physical and social infrastructures required to meet the health needs of the people of the Territory.
- The Pan American Health Organization, has drawn our attention to the many serious diseases that threaten outbreaks of pandemic proportion. On our own, and in conjunction with the UK Health Services we are called upon to respond to the International Health Regulations, in order to combat these threats, including the continued danger of Avian Flu or Bird Flu, that while not yet a direct threat to humans could yet become a major health challenge that we need to start preparing for now. During the year ahead the Ministry will strengthen its epidemiological services and diseases prevention capabilities. This will allow for the protection of the public from the effects of endemic and imported disease by rapid detection and coordinated response. To that end measures to be taken shall include but are not limited to:
- building capacity at international air and sea ports to conduct high level surveillance and referrals, for persons who appear to present symptoms of certain illnesses;
- ensuring that fit and proper procedures are followed for the importation of food;
- determining that the hygienic condition on board all carriers meet set international standards, and
- ensuring that appropriate quarantine facilities are set up within the Territory.
- We remain committed to ensuring that infrastructural development continues to keep pace with meeting the need for adequate and efficient health services for our people. That being the case, we are ready to embark upon a three-year project for the development of the new hospital. In addition, fully cognizant of the presence of the elderly population, we have opened the access road to the Spooner Estate: the site of the new home for the elderly. Now that the senior citizen home on Tortola is on its way, we have already turned our attention to the sister islands. Currently, an evaluation of the facility on Virgin Gorda is in progress, with the desired outcome being to build a new modern facility and raise the standards of operation, thus, improving living conditions for our seniors. There is no doubt in my mind that these much needed modern facilities will go a long way to contribute to the overall health of our people. This Government has embarked on an HIV/AIDS initiative aimed at educating, preventing and treating persons infected with or affected by the disease. Towards this end, our education campaign continues to be vigorous in our attempts to decrease incidences of new cases, as well as to intensify our treatment to help infected persons to live longer with more productive lives as recommended by UNICEF.
- Madam Speaker, out of all the countries in the region this Territory is the only one to implement an HIV/AIDS Summit for the youth. We have successfully completed two such summits and today some of our young people are in a better position to be ambassadors to their peers because of the training they have received. Additionally, Madam Speaker, the HIV/AIDS programme has now begun an inter-collaborative approach by working with the Ministry of Education and Culture to impact programmes that affect children Territory-wide as well as to influence policy to decrease incidences of HIV/AIDS in the workplace. Our commitment is to continue the fight against the stigma and discrimination experienced by those who are living with the disease.
- It is no secret Madam Speaker, that an intolerable situation exists in the Territory as it relates to solid waste disposal, a direct result of the daily volume of garbage produced being in excess of the capacity of the current incinerator. Fortunately all the necessary preparations are in progress to install a new hundred ton incinerator by June of 2006. This will eliminate the current harmful patterns of the storing, and open burning of waste products, restoring control and adequate management of solid waste in the Territory.
Education, Youth and Sports
- Madam Speaker the standards for a basic education in the BVI have long been set and maintaining these standards is not an issue. Competitiveness, however, is our greatest challenge. How does one deal with the reality that needs are many and resources are limited? This Government’s answer is prioritization. And we are of the view that none of this is possible without the proper educational parameters being drawn, and systems put in place.
- Consequently, Madam Speaker, the Ministry of Education and Culture has initiated the National Literacy Improvement Programme, which aim is to increase students’ literacy skills and raise academic achievements across the board.
- Likewise, acknowledging the nature of the distinct split in education with academics on one hand, and vocational on the other, the Ministry of Education in its determination to curb the level of disparity allowed to develop over the years, has moved to see to the commencement of the Technical/Vocational Training Programme at the HLSCC in January of 2006. This programme will provide both choice and quality to those who wish to pursue an alternative non traditional path in their career development.
- Madam Speaker there is good news for our scholarship recipients. It is common knowledge that the award to students is never enough to cover their expenses, thereby, creating excessive financial strain on both student and family members. We recognize the need for an adjustment, and we are at this time capable of entertaining such. I am pleased to announce today, that as of the next school year, the basic grant awarded to BVI scholarship recipients will be increased by fifty percent (50%). For example if you received a scholarship for $12,000 in 2005 this will increase to $18,000.00 in 2006. We have heard the cries of our students and we have answered positively.
Youth Affairs and Sports
- Madam Speaker, the Department of Youth Affairs and Sports is now ready to embark on Phase II of its youth development programme, in its overall action plan. The objective is to provide greater opportunities for the holistic development of the youth population in diverse disciplines, Territory wide. This second phase includes: inter-school and inter-village competitions in various activities –
a throw back to the past; - participation in the performing arts; the apprenticeship programme in conjunction with HLSCC, and at risk youth intervention programmes.
- Madam Speaker with the development of a national sports policy: already in draft, the department’s efforts are being concentrated on the development of a resource library to provide easy access to multimedia resource material. This library will be beneficial to both youth workers, and sports professionals.
- Madam Speaker our recognition of the importance of sports to our development and our culture leaves us with a commitment to the ongoing upgrading and maintenance of all recreational facilities. Such commitments are best exemplified by the current construction of the new track and field facility at the A.O. Shirley Recreation Grounds. This project which is being executed by the Chief Minister’s Office, will feature a track designed to International Standards. Yes international standards with a rubberized running surface, and other amenities, positioning the BVI to be a strong contender for regional and international sporting events. This facility will have a positive impact on the development of our own athletes. It is our expectation that this work will be completed by the end of June 2006.
H. Lavity Stoutt Community College
- Turning our attention to the H. Lavity Stoutt Community College Madam Speaker -- this institution, the pearl of our educational system, has been judiciously streamlining its operation with the promise of greater efficiency. The long awaited Learning Resource Center is about to be commissioned and with it comes much needed resources, such as student Government offices and student lounge; an auditorium; and expanded library facilities. The library facilities are vital because such facilities are imperative to the success of the college’s most ambitious venture, which is its quest for accreditation by the Middle State Council for Higher Education. Achieving this goal will improve the reputation of HLSCC and its relationship with other community colleges and universities abroad. In other words, HLSCC will become an established player in academic circles.
- And Madam Speaker, it is again my honour and a privilege to announce that beginning in the Fall Semester of 2006 all BVIslanders attending the HLSCC will do so free of cost. Let me emphasize Madam Speaker, all BVIslanders attending the HLSCC will do so free of cost, beginning with the Fall Semester of 2006.
- Madam Speaker, this is so significant, that I had to repeat it because few are the nations in the entire world who can offer their citizens the opportunity to aspire to higher education free of charge. It is a remarkable achievement that every member of our society should celebrate, that starting this fall we here in the BVI, enter this exclusive group.
Our Natural Resources
- The three S’s, (sun, sea and sand), which has since before the advent of Financial Services, been the main products of our economic salvation, continues to hold their own despite rising competition in the region. Madam Speaker, this fact is not lost on the Ministry of Natural Resources and Labor in their endeavor to preserve and promote these treasures:
envied by many. Madam Speaker this Government will bring before this Honourable House in 2006 environmental legislation to further enhance and protect our environment for future generations.
- Madam Speaker, this Government made a commitment to assist first time home owners with securing their first home and we are working overtime to make this a reality. In 2006 the Ministry of Natural Resources and Labour will complete its internal work and will present many BVIslanders with the opportunity to begin the process of owning their first home.
- Very early in 2006, or sooner, this Government will be presenting titles to land in the North Sound, Anegada, Spooner Estate and Nibbs Estate. Additionally, Madam Speaker, the Ministry of Natural Resources and Labour is also actively looking at making more
Crown Land available in the Valley, Virgin Gorda as there have been an increasing number of persons in that community making requests for lands.
Agriculture
- Madam Speaker, while admittedly there are limitations in the agricultural sector, particularly in the areas of weather, soil conditions and topography, we can agree that there are potentials to be explored. The live stock and poultry sectors, if harnessed correctly, could result in yields significantly disproportionate to investments in the favor of handsome profits. I am pleased to report that this trend is being encouraged by the Ministry of Natural Resources and Labour. Just recently a number of farmers have made relatively significant investments in the construction of pens and the purchase of quality grade stock. These investments are complemented by technical and financial assistance by this Government’s commitment to supporting their efforts, most notably is the opening of a privately owned fully automated poultry processing plant at Paraquita Bay.
- As the sector looks to 2006 Madam Speaker, Government has positioned itself through the completion of its veterinary laboratory, to protect the community from the consumption of contaminated meat and poultry products. In addition, the renovation of the Agricultural Department office at Paraquita Bay will enhance and expand our services to the public.
Tourism
- Madam Speaker, tourism continues to be the most dynamic and ever changing industry to the BVI. Because, in every sector of society and in every country, there is a potential market, and it is up to us to identify it and subsequently, decide whether or not to pursue it. This job is being carried out by the BVI Tourist Board with outstanding success.
- In the 2005 Budget Address, we reported that all indicators suggest that 2004 would have been a good season for tourism. The figures today not only confirmed our beliefs, but indicated a banner year for the sector. Total arrivals in 2004 were eight hundred six thousand, one hundred and twenty (806,120), compared to five hundred ninety-nine thousand, one hundred and two (599,102) in 2003, an increase of 34.6%. While cruise tourism posted a 56% rise in the same period (2004), overnight visitors showed a 21% increase, thus indicating the health of the sector across the board.
- Madam Speaker, 2006 could very well be as successful a year for the BVI as was 2005, given the unfortunate circumstances in Mexico and New Orleans, Louisiana, USA, both of which are favorite destinations for tourists. As for 2006, despite expectations of a rapidly rebuilt Mexican infrastructure; and a bit slower disaster recovery in the US, we are confident that our product is adequately developed to sustain growth over 2005.
- Madam Speaker, this optimism comes from knowing that our Tourist Board in their efforts to keep our product attractive has succeeded in further assisting locally owned small properties through the amendment to the Hotel Aid Ordinance and the successful launch of a new marketing programme, dubbed
“JEWELS of the BVI” at CTC28 in the USVI. Together with the enhancement of the popular tourist spots of Cane Garden Bay; and the aesthetic improvements to Crafts Alive in Road Town, we are sure to attract and excite new visitors.
- Internationally, the efforts of the Board continued, as they have completed the addition of Spain and Eastern Europe to the portfolio of their European Markets. As for 2006, the Board expects to lay further claims on Latin America and Canada as it embarks upon the establishment of public relation services in those areas to boost secondary tourism markets.
BVI International Unit
- Madam Speaker, the economy of the BVI known for its dependence on International Finance; which due to its global nature, often has the direct effect of rendering us vulnerable to the forces of external organizations and agencies. This Government is not oblivious to this reality, and has sought to mitigate the potential for such occurrence through the establishment of the
International Unit. This Unit will be led by an experienced senior Public Servant, equipped with the necessary secretarial and administrative support.
- Madam Speaker at its inception, the Unit will umbrella both the London Office and the International Finance Center: which are currently the two most outward facing departments. Additionally, the Unit will have responsibility for the co-ordination of all international activities by the BVI. The Unit, in helping the Territory to address all challenges and seize all opportunities, has considered its mission as having to develop, among other things:
- advanced intelligence so we are pre-warned of developments having the potential
- to adversely affect our economy;
- effect the creation of a network of relationships within the relevant regional and international bodies, to ensure the placement of allies where and when they are needed; and
- ensure participation in all relevant international forums.
- Madam Speaker, with these systems in place, the Unit will be well positioned to ensure that Ministers and senior officials are aware of developments that have the potential to impact upon the Territory’s long term interests. It will, in addition, assist Ministers and senior officials to access funding and grant-aid from major international agencies; provide well needed assistance to Ministers and senior officials relevant in their preparation for international meetings; along with coordinating the BVI’s representation on international and regional bodies, ensuring maximum value of membership and attendance.
- Madam Speaker, the introduction of the International Unit has been a major step forward for the BVI, in terms of international relations. Assistance has so far been provided in the preparation of the 2005 Overseas Consultative Council; the visit to the Asia Pacific region; and Organization for Economic Cooperation and Development forum in Melbourne, Australia.
- Madam Speaker, we are already seeing the clear benefits to the Territory, in so far as the BVI speaks with a clear coordinated voice to its International Partners. As indicated earlier, our recent road trip to Asia was a great success, and by all indications not only is the BVI seen as a reputable and attractive jurisdiction for Financial Services, but also the advances which we are implementing in our legislation and products being offered are being met with positive reviews. These positive reviews can be attributed directly to the efforts of the predecessor to this new unit the International Finance Centre.
International Finance Centre
- Madam Speaker, two years ago the International Finance Center (IFC) began their innovative Road Show initiative, featuring country tour after country tour and closed the year 2005 by blazing a trail through Mainland China beginning in Beijing, and having Shanghai as its city of highlight. Going to Beijing and Shanghai was calculated to show our appreciation for being listed as the Country responsible for the second largest investment inflows into China, while at the same time hoping to increase our share of that market.
- With over 40% of our Financial Services output emanating from Asia: particularly China, a second visit to the region was very much in order. In Beijing the Official BVI Delegation engaged senior Chinese Government Officials in dialogue to explain how the BVI Financial Services operates, and how its regulatory regime works to protect its integrity. In these discussions detailed constructive matters of importance to both China and the BVI were raised and it was our mutual view that the dialog should continue well beyond this visit. As a result we have extended an invitation for a delegation from China to visit BVI. The Shanghai Road Show as we knew, was our first, but much to our amazement, as it turned out, not only was it our first, it was also China’s first time as host to any International Finance Center.
That in our view speaks volumes for the BVI. Because, given the importance of the City of Shanghai, for us to get there first, surely confirms the BVI’s position as a leader in the Financial Services sector. Our presence in Shanghai was well received with over 100 delegates in attendance. The potential of Mainland China as we saw it, was so well expressed in Shanghai, that we have agreed to explore ways of working together with the Shanghai Municipal Government to help further profile the BVI with both Government and Private sectors in this important city.
- Madam Speaker, during 2005 Road Shows were held in Zurich, Geneva, Shanghai and Hong Kong. During these Road Shows the BVI was pleased to play host to hundreds of senior representatives of the Private Sector, including Major Banks, Wealth Managers, and Law Firms. These financial markets continue to be major contributors of business to our Financial Services Sector. This Government is extremely pleased with the results of these events, which do much to raise the profile of the BVI in the sector, while allowing both Government and Private sectors access to leading players in the global Financial Services Industry. More importantly these events lead to increased business opportunities for the sector in the Territory, thus ensuring continued growth. Such prosperity creates the kind of economic and employment opportunities for BVIslanders that this Government promised.
- Madam Speaker during the two year life of this initiative some $2 million dollars has been directed to the promotion, marketing, and public relation aspects of the Financial Services Sector, solely with the aim of retaining our stand as one of the pre-eminent financial centres of the world. I am pleased to report that it is my view, and the view of this Government, that it has done just that. This programme is one of our better examples of value for money anywhere that exists.
- Closer to home, as progress with the implementation of the Strategic Development Plan continues, a good corporate citizenship programme involving the Financial Services Sector and beyond, will be launched in 2006. Additionally a generic text book on Financial Services is being developed to be introduced into schools in the Territory as well.
Financial Services Commission
- Madam Speaker the Financial Services Commission (FSC) which was established as an autonomous body in 2001 was done with some degree of skepticism; and an apprehension for its ability to continue to maintain its revenue generating capacity after having to divest itself of its marketing arm. I am pleased to report that, after four years the reality has confounded those fears. With the exception of the year 2002 which understandably due to the events of 911, experienced a slight negative growth, the sector has seen positive and consistent growth ever since.
- The projected revenue for the year 2005 is expected to be exceeded in similar fashion to our 2004 projection, thus setting a trend for a fantastic 2006. In real terms, our projected revenue for this sector in 2005 is one hundred ten million dollars ($110,000,000) and is expected to rise to one hundred twelve million, five hundred thousand dollars ($112,500,000) by the close of business 2005. For 2006 we are projecting a windfall of just under one hundred thirty million dollars ($130,000,000). The performance of this sector and its consequent importance to Government’s revenue could never be over emphasized.
- Madam Speaker, the Commission in realizing that a well regulated industry means good corporate citizenry and lucrative patronage, continues to regulate. In so doing, the initiative providing a framework for Corporate Governance by regulated entities has executed a comprehensive study of corporate Governance. Extensive work on this initiative was a priority for 2005 with expansion to the insurance and other financial services sectors.
- In 2006, the ultimate objective is the realization of providing guidelines to the industry. When the IMF reports that “the BVI has most of the essential elements for a suitable framework for financial supervision,” it is quite rewarding to know that our efforts are not going unnoticed. Among its initiatives for 2006, the FSC has high hopes of finally commencing plans for the establishment of an FSC satellite office in Hong Kong. This office will service the volume of business originating from the region, particularly for Registry of Corporate Affairs. The FSC sees the establishment of a physical presence in Asia as pivotal to improving the efficiency of the services provided to this specialist market, and to reduce the barriers presented by language, culture and business environment.
Infrastructural Development
Electricity
- Madam Speaker let us turn our attention to electricity. Just a few months ago we received and accepted the BVI Electricity Corporation’s proposal on their Development Programme on the expansion of the electrical system in the Territory; which included the refinancing of old debt. We were determined to see a quick but lasting end to the troubles at the generating plant, which results in far too frequent disruptions in service. In endorsing the corporation’s plan to replace troubled generators, and add new ones in an expansion effort, this Legislative Council approved the borrowing and guarantee of a thirty-three million dollar ($33,000,000) loan from Banco Popular de Puerto Rico for this purpose. As Minister for Finance, I again express my thanks to Honourable Members for their strong support in approving the Resolution.
- Madam Speaker, the Corporation anticipates having the two new engines fully operational by the beginning of the fall in 2006, thus bringing to an end the current power outages being experienced in the Territory. Additionally Madam Speaker, it is my understanding that the Corporation is also actively investigating various strategies and options to ultimately replace the other two Rolls Royce engines in the immediate future.
Ports Improvements
- Madam Speaker, Ports improvements is another very critical area of our national infrastructure that requires immediate attention. All members of this Honourable House and the entire community will agree without hesitation that our ports facilities Territory wide; from Setting Point, Anegada to Dog Hole, Jost Van Dyke require immediate improvement.
- These current challenges facing our Ports range from inadequate facilities to the separation of passengers and cargo. These are situations that must be corrected if this Territory is to continue to grow and prosper. To address these challenges, the Ministry of Communications and Works, under the then leadership of our friend and colleague the late Paul P. Wattley and the BVI Ports Authority, had undertaken a comprehensive review of the Territory’s ports facilities examining and analyzing the existing conditions at the various ports and making recommendations for each site to address the existing situations and to accommodate future growth. The review also examined the possibility of establishing a mega yacht facility at Soper’s Hole in West End.
- This review has been completed; and as a Government we have taken the decision that the priority areas for immediate attention will be port facilities on Virgin Gorda; the Port Purcell facility, the ferry facility at West End, the Dog Hole, Jost Van Dyke facilities and Anegada port facilities. I cannot close without advising this Honourable House that these improvements when completed will cost this Territory well over a $250 million over the next 7 to 10 years.
Social Security
- Madam Speaker the Social Security Board celebrated its 25th anniversary during the month of July 2005. We took that moment to pay tribute to the tremendously positive role this institution has played and continues to play in promoting the well being of this Territory and protecting the financial interests of our community. As with any well run organization, the Social Security Board has continued to improve on its services, much to the benefit of its contributors and stakeholders. Beginning January 1, 2006, the maximum insurable earnings will increase to $30,420. This increase will continue to ensure that benefits paid are relevant and meaningful. At the same time, pensioners will see an increase in their monthly benefits.
Forecast for 2006
- Madam Speaker unfortunately, the damages done to this Territory by the floods of November 2003 are still in the process of being corrected and I apologize on behalf of this Government to the People of this Territory for the long delay. However, Honourable Members would recall approving the borrowing of ten million dollars ($10,000,000) from the Social Security Board for that purpose. As a priority of this Government commencement of the disbursement of some of those funds has already taken place in November 2005, and the Minister for Communications and Works has assured us that all works will be completed during 2006.
- Our legislative agenda will continue as planned as our focus continues to be on:
- A stronger economy
- Better healthcare and improved social services
- Good governance and “Government in the sun shine”
- A world class education system and investment in Youth Development and Sports
- Sustaining our natural resources, and
- Improving communication links and infrastructure
- As we revisit and update the Ten-Year National Tourism Plan for implementation, we will pursue with zeal and zest the further development of resorts and hotels in the Territory,
with emphasis on a championship golf course. Our aim remains the establishment of the BVI as a Mega Yacht base. The National Health Insurance Scheme is a must, and we will continue the development work to bring this programme into existence. Further, expert consultations will continue towards introducing a national mobile pension scheme to supplement the present social security age benefits, in which, proposals will be made to synchronize the age of retirement and eligibility for social security.
- Madam Speaker the foundation of democracy lies not only in the separation of the three branches of Government, but also in their equality. As such, we are obligated to bringing this Honourable House up to such standard. Therefore, we shall redouble our efforts to introduce measures to re-establish the prominence of, and respect for, this House as the highest law-making body in the Virgin Islands.
- Our work in the area of education continues, as we seek to build a world class system. Our commitment in this regard is clear: we will provide every child and young person in the British Virgin Islands with the opportunity to grow, learn and thrive. They will be given every tool and every necessary support to develop their God-given talents. And they will be encouraged to dream the biggest possible dreams – for as surely as our Territory has made miraculous strides over the past several decades, so too we are confident that when given the chance, the generation to come can do even greater things.
- Madam Speaker our initiative to develop land and home-ownership policies is on going. Additionally, land will be set aside for farming purposes as well.
- Further, this Government, since taking office, has always maintained that Non-established employees within the Public Service should receive similar benefits as the Established employees. We have made every effort to have this matter corrected and today, I am pleased to announce that, effective 1st January, 2006; all Non-established employees of the Public Service who have served 10 years or more will be eligible for Permanent and Pensionable status. In addition, Madam Speaker, established and Non-Established employees within the Public Service will now have, for the first time, the same grade and salary structure.
- Madam Speaker I have indicated that we will not levy any new taxes in 2006. The year ahead for the people of this Territory has much promise. This Budget is intended to serve as a framework from which to build. Even in the absence of the 2005 final figures, by projection, I feel comfortable in forecasting 2006 as a year of strong growth.
Acknowledgements
- As I close Madam Speaker a sincere thank you is in order for our public service, beginning with His Excellency, The Governor, whose contributions to the passage of crucial tax and financial services legislation was invaluable; The Deputy Governor; officers of all ranks, both junior and senior; the Attorney General and his staff, the Public Works Department in its capacity as executing agent for works; the Ministry of Communication and Works, the Ministry of Education and Culture, the Ministry of Natural Resources and Labour, the Ministry of Health and Social Development, the various statutory boards and the bodies they serve; the people of the Territory in all walks of life, both public and private; and of course, my staff at the Ministry of Finance and the former Financial Secretary, Mr. Glenroy Forbes, who has now joined the private sector. On behalf of the Ministry of Finance, I extend our very best wishes to him for another successful career.
- Madam Speaker behind the scenes lie players, to whom our call can never go unanswered, if we are to achieve the level of success we now enjoy. On behalf of this Government and the people of the BVI, I extend our thanks to the UK Government and its agencies, notably, the Foreign and Commonwealth Office, and the Department For International Development; the Caribbean Development Bank, the European Investment Bank, the United Nations Development Programme; the European Union; the Commonwealth Fund for Technical Co-operation; the Pan American Health Organization; the United States Agency for International Development; the Canadian Agency for International Development; the Organization of Eastern Caribbean States, and the Caribbean Community (CARICOM), for their various forms of support, whether in grants, loans or technical assistance. My gratitude is also expressed to our local institutions: the Social Security Board, Banco Popular de Puerto Rico,
Scotia bank (BVI) Ltd, First Caribbean International Bank, Development Bank of the Virgin Islands, Ltd; and First Bank, for their sustained ability to contribute to our economic needs.
- Finally, Madam Speaker, I want to take a moment to acknowledge and pay tribute to one who is not here with us, but whose spirit lives in every line of this budget: our dear friend and colleague, the late Honourable Paul P. Wattley. Paul was a true public servant in the finest sense of the word – a man who judged his success in life not by the riches he acquired, or the accolades he received, or the elections he won – but rather by the good that he was able to do for the people of this Territory. The gleam that was always in his eye bespoke the fierce integrity and devotion to service that animated his every action. We miss him today as much as ever – and we are today, as ever, grateful for the example he set for us all.
- This budget – from the surplus we dedicate to our reserves, to the capital expenditures for critical national projects – are all sprung from the same spirit of service that Paul based his life on and I have no doubt that he rests now in peace and will be well pleased to know that we carry on his legacy with humility, purpose and pride.
- Madam Speaker, as I noted at the outset of this Budget Address, this Budget is not just a document about dollars and cents – it is about people and I hope that point is now crystal clear. For this Budget is about the graduating High School student who next year will attend HLSCC free of charge. It is about the farmer who will benefit from the support of Government. It is about the construction company and petty contractors who will see their plates full as new private developments on Scrub Island, Beef Island and Norman Island provide them with substantial new contracts. It is about families who will sleep easier at night with the new hospital under construction that will be able to offer even better care. It is about a Territory that stands at the crossroads – looking back we pay respect to all those who made this day possible.
- We give thanks to our merciful creator for the bounty that he has bestowed upon us all. We celebrate the loving community that makes our every success an even greater pleasure, for all that we accomplish, and we do so as a united people and we look ahead to the future and see opportunity and the chance to do even greater things in the future.
- Madam Speaker, I now present this Government’s 2006 Budget, and look forward to the coming weeks where Honourable Members will debate its provisions. Madam Speaker, I thank you.
Financial Secretary (Ag.)
Kharid. Fraser
Deputy Financial Secretary
Neil M. Smith
Director of Financial Management
Lucia C. Lettsome
Budget Unit
Jeremiah Frett
Diane Parsons
Trecia Thomas-Maduro
Daphne Frett
Michelynne Bassue
Delroy Jennings
Laurel Smith
Vinette Forbes
Lilian George
Gregory Mendez
Jahmal Rabsatt
Administration Unit
Cecile Jardine
Althea Richardson-Crandall
Lenia Smith-Hodge
Maria Smith-Thomas
C. Jovita Mercer-Scatliffe
Colette Callwood
Rhonda Glasgow
Helen Ajisebutu
Shervon Tyson
Dean McDowell
Kareem Thomas
Nardia Thomas
Tristan Mills
Procurement Unit
Avonette Morton
Diana Purcell-Gumbs
Myra Maynard
Project Cycle Management Unit
Lucille Malone
Shaina Smith
Carlene Prentice
Alisia Browne
Carline Prentice
Human Resource Management Unit
Marisa Frett
Simera Durante
Finance and Economic Affairs Secretaruat
Mathilda Uhrle
Natalie Fahie-Smith
Dwayne Thomas
Teshonda Thomas
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